“Computer Glitch” That Went Unfixed for 5 Years Caused Hundreds of Bank Customers to Lose Their Homes

posted in: Banking News | 0

Wells Fargo blames faulty computer software for the foreclosure of hundreds of homes after the bank incorrectly denied them mortgage modifications.

The computer error began in April 2010, was fixed in October 2015, and Wells Fargo only admitted it in a regulatory filing in August 2018.

Wells Fargo said the software mistakenly denied about 625 homeowners mortgage modifications, and about 400 of those customers were foreclosed upon.

Despite waiting years to even admit their mistakes, Wells Fargo said in a statement that it was “very sorry that this error occurred” and said it was “providing remediation” to the affected customers.

The bank said it has set aside $8 million to compensate customers who lost their homes because of the problem.

Wells Fargo has been caught up in several scandals recently that have cost the corporation billions of dollars.

The company is currently facing “formal or informal inquiries or investigations” from government agencies over how they purchased federal low-income housing tax credits. The documents state the inquiries are related to “the financing of low income housing developments,” but does not get specific.

The Justice Department said earlier this month that Wells Fargo agreed to pay $2.1 billion in fines for issuing mortgage loans it knew had falsified income information.

In June, the Securities and Exchange Commission accused Wells Fargo of promoting high-fee debt products to take advantage of small investors. Without admitting guilt, Wells Fargo Advisors, the bank’s brokerage division, agreed to pay a $4 million penalty as well as return $930,377 plus $178,064 of interest.

In 2017, the bank also admitted to charging customers unfair mortgage rate lock extension fees and forcing other customers to pay for auto insurance they didn’t need.